Investor Alert: Don’t Invite Investment Scams to Find You

Sept. 27, 2018

The SEC’s Office of Investor Education and Advocacy (OIEA) and Retail Strategy Task Force (RSTF) warn investors that providing your phone number and email address in response to an online investment promotion may make you a target for fraud.

Some investment scams start with a promotion or advertisement, like an intriguing online video or email, followed by a seemingly innocent request for your phone number and email address. The purpose of the promotion is to make you believe that there is an exciting opportunity that requires you to act soon or you will miss it. Think carefully before giving the promoters your phone number or email address – it may be a fraud.

The promoters often seek to assure you that the investment is legitimate by not asking for any money upfront and telling you that it is risk-free. To get started, they say, all you need to do is give them your phone number and email address, create an account, or sign in to an online portal.

Once you sign up, you begin to receive unsolicited offers for so-called “can’t miss” investment opportunities. You may even start receiving phone calls from slick salespeople who will try to befriend you and then lure you into an investment scam.

The fraudsters also may add your contact information to a list with names and contact information of others who signed up. Then they may sell the list – including your phone number and email address – to other fraudsters who will target you for other scams. And these fraudsters may sell or share your phone number and email address again, so that you and your money are targeted for life.

In SEC v Atkinson, et al. and SEC v. Montano, et al., the SEC charged several online marketers for perpetuating a fraudulent investment scheme by mass distributing bogus videos and other marketing materials through emails and websites. The SEC alleges that the videos and marketing materials fraudulently touted purported trading software running on autopilot and supposedly capable of generating large profits for investors who opened trading accounts. The videos allegedly purport to show actual investors and real results, but are complete fiction, and include:

Paid actors pretending to be recent millionaires;

Fake testimonials that falsely claimed there was great wealth made by investing in, and using the free trading software;

Expensive homes, luxury cars, and other rented props that supported the illusion that people had accumulated great wealth by making the investment touted in the videos;

Fake photos of investment account balances; and

Staged “live” demonstrations of people opening and funding accounts in “real time” and seeing their trading balances increase automatically.

You can watch segments of the videos the SEC alleges are fraudulent:

The marketers allegedly coordinated the timing and spamming of their campaigns, sometimes sending millions of emails with fake marketing materials to prospective investors. The SEC alleges that several of the marketers, while communicating among themselves, ridiculed investors who believed the marketing materials and who lost their money to the investment scams.

Be skeptical of any promotion that suggests you will get rich quickly, or that you are guaranteed to make a lot of money with little or no risk. These are classic signs of investment fraud. If you have a question about an investment promotion, contact OIEA by phone at 1-800-732-0330, online, or by email at Help@SEC.gov.

If an investment promotion grabs your interest, research the “opportunity” before providing your phone number and email address. Take a few minutes to verify that the person offering the investment is currently registered or licensed by using the free and simple search tool on Investor.gov. If you cannot verify that the person is currently registered or licensed, do not hand over any money and do not share your contact information.

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The Office of Investor Education and Advocacy has provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.